Owed Money on a Florida Contract? Understand Prejudgment Interest

Prejudgment interest is interest on money owed, for the time between the loss and the court’s judgment. In a Florida breach of contract case, the contract’s terms, the dates, and the statutory rate shape the final number.

This guide explains how that number is built. You can use it to check a damages figure before you file or respond.

What Prejudgment Interest Is and How It Differs From Post-Judgment Interest

Prejudgment interest covers the period before a judgment is entered. Post-judgment interest covers the period after. Keep the two apart, because they follow different rules.

Post-judgment interest is set on a different timeline. Fla. Stat. § 55.03 says the rate on a judgment is set when the judgment is obtained. It is adjusted each year on January 1 until the judgment is paid, except for judgments entered by the clerk of the court pursuant to ss. 55.141, 61.14, 938.29, and 938.30, which are not adjusted annually. That subsection deals with judgments, so it answers the after-judgment question.

Our post-judgment interest guide covers that side in more detail.

When you review a damages number, split it into parts. Label each part as before judgment or after judgment. Then figure each part on its own.

The Statutory Framework: Florida Statute § 55.03

Under Fla. Stat. § 687.01, in all cases where interest accrues and no special contract fixes its rate, the applicable rate is the rate provided for in section 55.03.

Section 55.03 says the Chief Financial Officer sets the rate for each calendar quarter. The rate is set on December 1, March 1, June 1 and September 1. The CFO’s rate is adjusted quarterly, but for a judgment the rate is established when the judgment is obtained and adjusted annually on January 1 of each year until paid, except for judgments entered by the clerk of the court pursuant to ss. 55.141, 61.14, 938.29, and 938.30, which are not adjusted annually. The figure comes from averaging the Federal Reserve Bank of New York discount rate for the preceding 12 months, then adding 400 basis points.

That means the statutory rate can change during a long dispute. The statute also says nothing in it affects a rate set by written contract or obligation. Read the contract before you apply the statutory rate.

Liquidated vs. Unliquidated Damages: Why the Distinction Matters

Liquidated damages are amounts the contract fixes or makes easy to calculate. Unliquidated damages are amounts a court must work out from evidence.

Here is a plain example. A contractor’s final invoice for $50,000, at the agreed price, is a fixed sum. A claim for profits lost during a delayed project is different. Records and testimony often play a central role in how a claim like this is presented.

Keep these as separate lines in your damages figure. The two kinds of loss rest on different proof. The bucket an amount falls into also affects how its interest is figured.

When Interest Starts Accruing

The start date matters as much as the rate. Build it from your business records.

Check the contract for due dates on each payment. Check invoice dates, delivery or completion dates, and any written demand letters. These documents show when money came due and when you first asked for it.

Payment schedules matter too. A contract that splits the price into milestones may give each milestone its own due date. Treat each one as a separate date.

The day you filed suit is a different date. Do not use it as the due date unless your records show that date was the due date.

Which Rate Applies and How It Changes Over Time

A written contract rate controls the parties’ agreed obligation. The statutory rate applies when the contract is silent. Section 55.03 says it does not affect a rate set by written contract.

Florida also limits how high contract interest can go. Fla. Stat. § 687.02 declares contracts for interest above the equivalent of 18 percent per annum simple interest to be usurious. The same 18 percent limit appears in Fla. Stat. § 687.03.

For larger loans, a higher limit applies. Under Fla. Stat. § 687.02, if a loan, advance of money, line of credit, forbearance or obligation exceeds $500,000 in amount or value, no contract to pay interest on it is usurious unless the rate of interest exceeds the rate prescribed in s. 687.071.

If your contract sets a late-payment rate, check it against the 18 percent limit. If the contract is silent, expect the statutory rate to change over time. A long dispute can involve more than one rate.

How to Work Through a Damages Estimate: A Simplified Example

Simple interest is principal times rate times time. Figure each period separately, then add the periods together.

Assume a $50,000 invoice is past due and the contract has no interest clause. Assume the rate is 6 percent in year one and 8 percent in year two. These rates are invented for this example. They are not Florida’s actual rates.

Year one: $50,000 × 6% × 1 year = $3,000. Year two: $50,000 × 8% × 1 year = $4,000. Total interest: $7,000.

Now assume the customer paid $20,000 at the end of year one, and that payment reduced the principal. Year two interest becomes $30,000 × 8% = $2,400. Total interest is $5,400.

This example is illustrative only. Actual results depend on the facts of a matter, the rates in effect, and how a court applies them.

Factors That Change the Amount

Payments change the number first. A partial payment reduces the principal from the date it was paid. Record the amount and the date of every payment.

Contract terms come next. An interest clause, a late-payment provision, or a later written change can alter the figure. Review the signed agreement and any written amendments.

Account balances can also matter. A claim on an account stated theory requires an agreement fixing the amount due and a promise to pay it. Bushnell v. Portfolio Recovery Assocs., LLC describes that requirement.

An express contract can limit other theories. Williams v. Johnson holds that claims arising from an express contract covering the same subject matter will not support unjust enrichment.

The amount proven at trial or agreed in settlement sets what interest you can claim.

Common Mistakes When Estimating Prejudgment Interest

The most common errors are treating every dollar as fixed, starting the clock on the wrong date, and using one rate for the whole period. Avoid these five mistakes.

First, do not treat lost profits as if they were an agreed invoice price. Those amounts need separate proof.

Second, do not start interest on the filing date unless your records show that was the due date.

Third, do not use one rate for the full period. Check the rate in effect for each period.

Fourth, do not ignore partial payments. Apply each one on its actual date.

Fifth, do not rely on an email or verbal change to payment terms without confirming it in writing. Written confirmation makes the numbers easier to prove.

Talk With Eduardo A. Maura About Your Damages Figure

Maybe you hold an unpaid invoice. Maybe you are a contractor waiting on a final payment. Maybe a partner or buyer has not delivered what the contract promised. In each case, check the interest in your damages number before you rely on it.

Eduardo A. Maura is the responsible lawyer for this page. Our team can review the contract, the dates, the payments, and the figures with you. The firm does not offer a free consultation.

You can call (305) 570-2208 or request a case evaluation. Our office is at 1646 W Snow Ave in Tampa, Florida. We handle business disputes for clients in Hillsborough County and the Tampa Bay area.

For more reading, see our guides on contract modification by email or verbal agreement and on mistake or misrepresentation in business contracts.

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